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TMI Blog2019 (1) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... on and maintenance of SEZ. Consequently, on the basis of approval given by the Board of Approvals for the transfer of bare shell to the co-developer as per agreement, the profit arising to the assessee from the aforesaid authorized transactions is eligible for deduction u/s 80IAB of the Act. So, we find no illegality or perversity in the findings returned by ld. CIT (A) - decided against the Revenue. Treatment to signage income received by the assessee company from tenants - ‘income from other sources’ or ‘income from house property’- disallowance of deduction u/s 24(a) - Held that:- Tribunal in case of Manpreet Singh vs. ITO – (2015 (2) TMI 159 - ITAT DELHI) wherein it was held that, “the income earned by the assessee for renting of terrace for installation of mobile antenna was taxable as ‘income from house property’ and as such deduction u/s 24(a) @ 30% of the annual value was allowable.” When it is not in dispute that the assessee company has derived the signage income from the tenants from the space owned by the assessee company and not from the outsiders as it allowed tenants to use the space at the atrium/ different floors for putting signage, the signage income has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of such clarifications because it had the effect of diluting the disclaimer clause which was added on behest of CBDT. 4. Whether the Ld. CIT(A) has erred in law and facts of the case in holding the transfer of bare shells by assessee to codeveloper was an authorized operation ignoring the fact that such transfer was not an authorized operation as per Notification No SO 1846 E dated 27 10.2006 5. Whether the Ld. CIT(A) has erred in law and facts of the case in holding the transfer of bare shells by assessee to codeveloper was an authorized operation ignoring the fact that the BoA had only allowed such transfer subject to the condition that taxability of such transaction would be examined by IT authorities 6. Whether the Ld. CIT(A) has erred In law and on facts in Ignoring that even he clarification dated 20.01.11 only states that transfer of bare shells by assessee to its co-developers is allowed and it no where says that it was an authorized operation eligible for benefits under the SEZ Act. 7. Whether the Ld CIT(A) has erred in law and on facts of the case in holding that the assessee is eligible for claim of deduction u/s 80lAS in respect of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whether the Ld CIT(A) has erred in law on facts in holding that the bare shell buildings transferred to CO-developer was stock in trade as against capital asset. 14. Whether the Ld. CIT(A) has erred in law on facts in Ignoring the alternate observation given by the AO in the assessment order that even if income from transfer of assets is to be considered as development income, the entire consideration cannot be treated as exempt u/s 80IAB, as it actually is rent for a period of 49 years and rent corresponding to the year under consideration is 1/49 of the total development consideration. Thus, the total deduction u/s 80IAB in the year under consideration can in no case exceed 1/49 of the total development consideration. 15. Whether the Ld. CIT(A) has erred in law, on facts and in circumstances of the case in holding that the signage income received from tenants is not income from other sources but is in the nature of Income from house property and allowed the standard deduction u/s 24(a) of the IT Act. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company is engaged in the business of leasing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 80IAB for a period of 10 years and it is the third year of claiming deduction. It is also not in dispute that the assessee has claimed deduction u/s 80IAB on the basis of agreement entered into between the assessee company and its co-developer, M/s. DAPL with regard to DLF IT Park, Gurgaon developed by M/s. DAPL. It is also not in dispute that the assessee company has based its claim on the basis of approval granted to the assessee by the Board of Approvals of Special Economic Zones to the co-developer agreement with aforesaid M/s. DAPL. 6. In the backdrop of the aforesaid undisputed fact, the ld. AR for the assessee contended that the identical issue has already been decided in its favour of the assessee by the coordinate Bench of the Tribunal in assessee s own case in AY 2008-09 in ITA Nos.5469 5366/Del/2012 which fact has not been controverted by the ld. DR for the Revenue. 7. AO in order to decline the deduction u/s 80IAB proceeded on the premise that the claim of deduction of ₹ 93,09,55,202/- is actually a profit accruing to the assessee from the sale of asset and not income and the sale of such nature is not authorized activities under the SEZ Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of bare shell building on long term lease to approved codeveloper are authorized activities under SEZ Act Rules. Thus these clarifications also dispel the findings of CIT revising the asse4ssment order and setting aside the same. 263 order and findings therein being contrary to legal provisions is liable to be quashed. The assessment order being is conformity with SEZ Act, Rules and provisions of Section 80IAB can neither be termed as erroneous or prejudicial to the interest or revenue. Page 28 Para 6.9 Ld. Counsel contends that Ld. CITs proposition to tax it as capital gains is against the basic principle of taxation as large scale real estate business activities continuously carried on by assessee and bare shell buildings declared as stock-in-trade in its books of accounts, as per its objects clause in its Memorandum and Articles of Association can be taxed only under the head Business Income. Page 35 para 6.16 The letter of approval is issued by the Board by a statutory process of law and once it has been issued by the exclusive sanctioning authority, the consequential benefits that are available to a Developer cannot be denied. The Assessing Officer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude construction of bare shell/cold shell/warm shell buildings and transfer thereof, BOA has approved it and clarified the same. There is enough material on the record to hold that the transfer of bare shell buildings to co-developers constitute authorized activity. Thus, we see no error on any count as held by CIT in the order of assessing officer allowing deduction u/s 80IAB. 39. We thus find that assessee is a developer under the SEZ Act and is in the business of developing a SEZ, the SEZ has been notified on the first day of April 2005 under the Special Economic Zone Act 2005 ; and the profits have been derived from the business of development, operation and maintenance of SEZ. We thus fully agree with the finding of the Ld. CIT(A) that all the conditions as required to be specified under the SEZ Act/Rules are fulfilled and the assessee is approved developer for all the intent and purposes of Section 80 IAB I.T of the Act. Consequent upon approval granted by the BOA for transfer of bare shell to the co-developer, the profits arising to the assessee from such an authorized transaction are eligible for deduction u/s 80IAB of the Act. For a ready reference provisions l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Global Space Pvt. Ltd.. The ld. CIT (A) extracted the relevant portion of MoU in the impugned order and the same is reproduced for ready perusal as under :- Subject to all local laws applicable, Lessor shall through its architect identify the locations and provide space for signage at the atrium/floor occupied by the LESSEE, as approved by the architect and the LESSEE will the allowed to put signage on such location. All taxes including service tax, duties, rates, cesses, costs and charges relating to the signage payable to the concerned authorities shall be borne and paid by LESSEE. 11. The ld. CIT (A) also relied upon the decision rendered by the Delhi Bench of the Tribunal in case cited as Manpreet Singh vs. ITO (2015) 53 taxmann.com 244 (ITAT Delhi) wherein it was held that, the income earned by the assessee for renting of terrace for installation of mobile antenna was taxable as income from house property and as such deduction u/s 24(a) @ 30% of the annual value was allowable. 12. Keeping in view the aforesaid facts and circumstances of the case, we are of the considered view that when it is not in dispute that the assessee company has derive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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